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2014 (11) TMI 518 - AT - Income TaxReassessment u/s 147 - Performance Linked Incentive disallowed – Held that:- The AO completed the assessment u/s 143(3) of the Act at an income of ₹ 435,03,14,230/- and on appeal filed by the assessee the FAA has also given some relief to the assessee and appeal effect u/s 143(3)/250/154 was also given by the AO on 09/04/2008 - AO during the course of original assessment proceeding raised specific query regarding change in accounting policy and the assessee filed its reply dated 12/01/2006 with support of documentary evidence - The AO has considered the same and accepted the explanation given by the assessee - the AO has dealt upon the issue of Performance Linked Incentive (PLI) during the course of original assessment - The assessee company has duly disclosed the change in accounting policy regarding Productivity Linked Incentive before the AO at the time of original assessment. Depreciation on plant & machinery on Account of exchange variation disallowed – software development expenses disallowed - Held that:-There is no occasion to add back ₹ 24,08,326/- as depreciation on account of exchange variation of ₹ 84,32,302/- capitalized in the cost of fixed assets that the issue of disallowances of software development in M/s Amway India Enterprises vs. DCIT [2008 (11) TMI 432 - ITAT DELHI] it has been held that software development expenses are revenue in nature - The details of software expenses has already been furnished by the assessee during the course of original assessment which is not denied by the Revenue Authority in their orders. Notice for reopening of assessment u/s 148 – Held that:- The year in question is A.Y. 2004-05 which means any notice u/s 148 issued after 31/03/2009 is not sustainable in the eye of law - It can only be sustainable if it passes the test of proviso, namely that the escapement of income should be on account of failure on the assessee’s part to disclose fully and truly all material facts relevant to its income - When the AO is able to demonstrate that escapement of income therein is occasioned by incompetence or inaccuracy in the assessee disclosure - the reassessment order is not sustainable in the eye of law and the AO assumed his jurisdiction u/s 147 of the Act as it was a case of change of opinion and the AO has not brought on record any fresh material or information for assuming jurisdiction u/s 147 of the Act – the order of the FAA is upheld – Decided against revenue.
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